Sunday, June 12, 2016

April's job openings, wholesale sales and inventory, and Mortgage Monitor

it's been a slow week for regular reports, with only the Job Openings and Labor Turnover Survey (JOLTS) for April from the BLS, the April report on Wholesale Trade, Sales and Inventories from the Census, and the Mortgage Monitor for April (pdf) from Black Knight Financial Services released among the reports we regularly cover on a monthly basis...the week also saw the release of the Consumer Credit Report for April, which showed that overall consumer credit, a measure of non-real estate personal debt, expanded by a seasonally adjusted $13.4 billion, or at a 4.5% annual rate, as non-revolving credit expanded at a 5.4% rate to $2,650.0 billion and revolving credit outstanding rose at a 2.1% rate to $951.5 billion...that represented the slowest monthly consumer credit growth rate since March 2014, and it followed a March report that showed the greatest credit expansion rate since November 2001, so we suspect the seasonal adjustment for those two months has gone awry....the Fed also released the 1st Quarter Flow of Funds report, a 196 page pdf report that tracks the flow of money throughout the economy as it moves between households, businesses, and government, and which is usually reported on for household net worth, which tends to fluctuate with the stock market and the value of homes, as measured by the CoreLogic Home Price Index…this report showed that household net worth rose from $87.2 trillion in the 4th quarter of 2015 to a record $88.1 trillion in the 1st quarter of 2016, as the value of real estate owned by households rose by $498 billion while the value of corporate stock owned by households decreased by $160 billion…..

Job Openings Up in April, Hiring and Firing Down

the Job Openings and Labor Turnover Survey (JOLTS) report for April from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 118,000, from 5,670,000 in March to 5,788,000 in April, after March job openings were revised lower, from 5,757,000 to 5,670,000...April jobs openings were also just 3.7% higher than the 5,580,000 job openings reported in April a year ago, as the job opening ratio expressed as a percentage of the employed rose to 3.9% in April from 3.8% in March, also up from 3.8% a year ago...the greatest increase in job openings was in the trade, transportation, and utilities category, where openings rose by 155,000 to 1,120,000, while job openings in professional and business services fell by 274,000 to 871,000 (see table 1 for more details)...like most BLS releases, the press release for report is easy to understand and also refers us to the associated table for the data cited, which are linked at the end of the release...

the JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and 'other separations', which includes retirements and deaths....in April, seasonally adjusted new hires totaled 5,092,000, down by 198,000 from the revised 5,290,000 who were hired or rehired in March, as the hiring rate as a percentage of all employed fell from 3.7% to 3.5%, which was also down from the hiring rate of 3.6% in April a year earlier (details of hiring by industry since December are in table 2)....meanwhile, total separations also fell, by 108,000, from 5,098,000 in March to 4,988,000 in April, while the separations rate as a percentage of the employed remained at 3.5%, which was also the same separations rate as in April a year ago (see table 3)...subtracting the 4,988,000 total separations from the total hires of 5,092,000 would imply an increase of 104,000 jobs in April, a bit less than the revised payroll job increase of 123,000 for April reported by the May establishment survey last week, but still not an unusual difference and within the expected +/-115,000 margin of error in these incomplete samplings... 

breaking down the seasonally adjusted job separations, the BLS finds that 2,912,000 of us voluntarily quit their jobs in April, down by 36,000 from the revised 2,948,000 who quit their jobs in March, while the quits rate, widely watched as an indicator of worker confidence, slipped from 2.1% to 2.0% of total employment, which was still up from 1.9% a year earlier (see details in table 4)....in addition to those who quit, another 1,646,000 were either laid off, fired or otherwise discharged in April, down by 122,000 from the revised 1,768,000 who were discharged in March, as the discharges rate fell to 1.1% of all those who were employed during the month, from 1.2% in March and from 1.3% a year earlier....meanwhile, other separations, which includes retirements and deaths, were at 430,000 in April, up from 380,000 in March, for an 'other separations' rate of 0.3%, which was unchanged....both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release...

April Wholesale Sales Up 1.0%, Wholesale Inventories Up 0.6%

the April report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $434.2 billion, up 1.0 percent (+/-0.5%) from the revised March level, but still down 2.6% percent (+/-1.2%) from wholesale sales of April 2015... the March preliminary estimate was revised down $0.7 billion or almost 0.2% from the $430.7 level reported last month ... April wholesale sales of durable goods were up 0.4 percent (+/-0.7%)* from last month but were down 1.4 percent (+/-1.8%)* from a year earlier, with a 1.6% increase in wholesale sales of vehicles and vehicle parts leading the increase for the month, while the value of wholesale sales of electrical and electronic goods fell 2.7%....wholesale sales of nondurable goods were up 1.5 percent (+/-0.5%) from March but were down 3.8 percent (+/-1.6%) from last April, with wholesale sales petroleum and petroleum products up 9.0% on higher prices...as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods produced or finally sold....

on the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods on the shelf represent goods that were produced but not sold, and this April report estimated that wholesale inventories were valued at a seasonally adjusted $587.9 billion at month end, an increase of 0.6 percent (+/-0.4%)* from the revised March level and 0.9 percent (+/-1.4%)* higher than in April a year ago, with the March preliminary estimate revised upward $0.7 billion, or more than 0.1%, at the same time....inventories of durable goods were up 0.2 percent (+/-0.4%)* from March, but down 1.8 percent (+/-1.4%) from a year earlier, with inventories of lumber and other construction materials up 1.3%, while inventories of computers and peripheral equipment were down 3.0%...at the same time, the value of wholesale inventories of nondurable goods were up 1.3 percent (+/-0.5%) from March and were up 5.5 percent (+/-1.9%) from last April, as the value of inventories of raw farm products rose 7.5% while wholesale inventories of drugs and drug store supplies rose 2.2%...the upward revision to March wholesale inventories implies an upward revision of about 0.02 percentage points to 1st quarter GDP, while April wholesale inventories, after an adjustment for a modest rise in the April producer price index, will likely also underpin an real inventory increase in the 2nd quarter as well...

A Record Low for New Foreclosures, Another Record High for Mean Time in Foreclosure

the Mortgage Monitor for April (pdf) from Black Knight Financial Services (BKFS, formerly LPS) reported that there were 595,235 home mortgages, or 1.17% of all mortgages outstanding, remaining in the foreclosure process at the end of April, which was down from 630,766, or 1.25% of all active loans, that were in foreclosure at the end of March, and down from 1.63% of all mortgages that were in foreclosure in April of last year.....these are homeowners who at least had a foreclosure notice served but whose homes had not yet been seized, and the April "foreclosure inventory" now represents the lowest percentage of homes that were in the foreclosure process since the summer of 2007... new foreclosure starts, which have been volatile from month to month, fell to 58,728 in April from 72,762 in March and from 70,400 in April a year ago; this was the lowest level of new foreclosures since April 2005, before the mortgage crisis began...

in addition to homes in foreclosure, BKFS data also showed that 2,145,589 mortgages, or 4.24% of all mortgage loans, were at least one mortgage payment overdue but not in foreclosure at the end of April, up from the 4.08% of homeowners with a mortgage who were more than 30 days behind in March, but down from the mortgage delinquency rate of 4.72% in April a year earlier...of those who were delinquent in April, 730,179 home owners, or 1.45% of those with a mortgage, were more than 90 days behind on mortgage payments, but still not in foreclosure at the end of the month, which was down from 732,765 such "seriously delinquent" mortgages in March...combining the total number of delinquent mortgages with those in foreclosure, we find that a total of 2,740,824 mortgage loans, or 5.41% of homeowners with a mortgage, were either late in paying or in foreclosure at the end of April, and that 1,325,141, or 2.62% of all homeowners, were in serious trouble, ie, either "seriously delinquent" or already in foreclosure at month end...

the graph below, from page 5 of the mortgage monitor pdf, shows the monthly historical counts of both foreclosure starts and of new 90 day delinquencies...the new 90 day delinquencies are tracked by the red line, with an obvious seasonal pattern wherein homeowners tend to fall behind on their mortgage payments as the holiday shopping season ensues, while the seasonal low for such serious defaults typically occurs in March...monthly foreclosure starts are shown below as smoky blue bars, which are further divided into new first time foreclosures, shown as the darker portion of each bar, and repeat foreclosures shown in light blue, which are mortgages where the homeowner had been foreclosed on previously and either caught up on his payments or got a loan modification at that time, only to fall behind on payments another time and subsequently be foreclosed on again...foreclosure starts usually hit their seasonal low in April, a month after the seasonal low for the 90 day defaults...and while it's fairly clear that total foreclosure starts in April were the lowest since April of 2005, if you look close you'll also notice that new foreclosure starts are the lowest on record, dating back to at least 2000...

April 2016 LPS 90 day delinquencies vs foreclosure starts

for the details of the historical mortgage crisis metrics covered by the Mortgage Monitor, we're including below that part of the monthly table showing the monthly count of active home mortgage loans and their delinquency status, which comes from page 16 of the pdf....the columns in the table below show the total active mortgage loan count nationally for each month given, number of mortgages that were delinquent by more than 90 days but not yet in foreclosure, the monthly count of those mortgages that are in the foreclosure process (FC), the total non-current mortgages, including those that just missed one or two payments, and then the number of foreclosure starts for each month over the past 4 months and for each January shown going back to January 2005…in the last two columns, we see the average length of time that those who have been more than 90 days delinquent have remained in their homes without foreclosure, and then the average number of days those in foreclosure have been stuck in that process because of the lengthy foreclosure pipelines…with the slowdown in new foreclosures, the average length of delinquency for those who have been more than 90 days delinquent without foreclosure has now climbed back up to 520 days, but it’s is still down from the April 2015 record of 536 days, while the average time of delinquency for those who’ve been in foreclosure without a resolution has increased again and at 1088 days has again topped the record set last month…that means that the average homeowner who is in foreclosure now has been there roughly three years, which, considering that this year's new foreclosure starts were all less than 120 days old, suggests that many foreclosures started early in the crisis are still not yet completed…  

April 2016 LPS loan counts and days delinquent table


(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most from the aforementioned GGO posts, contact me…)         

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